Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Wednesday, June 4, 2014

YET ANOTHER POST CALLING FOR A VOLUNTARY TAX PREPARER DESIGNATION

Fellow tax blogger Jason Dinesen, and Enrolled Agent (EA) gives
us “Yet Another Post About Regulation of Tax Preparers” in response to the
recent NAEA letter to the IRS written, according to Jason’s post, “in opposition to the proposed voluntary
system”.

As I understand it,
the NAEA does not oppose a voluntary certification program, but has some
concerns with the Service’s current proposal.At the end the letter suggests “IRS
should consider a voluntary RTRP program.”

Two of Jason’s
reasons for opposing a new voluntary, or mandatory, IRS-sponsored designation do have some
merit –

“1. Enrolled Agents would be pushed even
further to the fringes of the tax world by any new IRS-mandated or IRS-blessed
designation.

Unfortunately the
IRS has never properly promoted, or properly recognized, the Enrolled Agent
designation.My proposal for an
IRS-sponsored voluntary certification (see “What the IRS Should Do About the RTRP”) calls for two-tiers – a basic RTRP designation and an “Enrolled Tax
Return Preparer” designation which would replace the current unfortunately
named Enrolled Agent status.I compare
the RTRP to a Bachelors degree and the ERTP (or EA) to a Master’s Degree.

2. The IRS doesn’t need more things on its plate. It
can’t handle the things it currently has on its plate. How would they
successfully oversee some new designation? “

I agree with this
statement.Having the IRS oversee the
designation is not the best idea.I have
suggested that the voluntary RTRP-like designation be administered by an
independent industry-based organization like an American Institute of
Registered Tax Return Preparers (see “It's Time for Independent Certification for Tax Preparers").

Jason also opposes
an RTRP certification because he feels “There
is no compelling need for a new designation”.Here I disagree.Some of the reasons behind the IRS original
attempt at a mandatory RTRP program were valid.As I have pointed out many times any Tom, Dick or Harriet can hang out a
shingle as a “tax preparer,” regardless of education or ability.And, thanks to tax preparation software, any
Tom, Dick or Harriet, with absolutely no training, experience or knowledge, can
simply purchase a tax preparation software package and try to pass themselves
off as a “tax professional”.The
taxpayer public does need a way to determine the relative competence of a
potential tax preparer.

Jason’s solution is
–

“Promote the EA designation as the voluntary
credential of choice for tax pros who aren’t currently licensed. Simple.
Efficient.”

I never became an
Enrolled Agent because I had no desire to represent taxpayers before the IRS
(other than to assist clients with audits of returns I have prepared).There are many, many, many competent”unenrolled”
tax preparers who are like me in this regard.Enrolled Agents are authorized to represent taxpayers before the IRS,
and in that context it is right for the IRS to regulate the EA designation.

As another aside of
honesty – I really did not become aware of the Enrolled Agent designation until
probably half-way into my current 43-season career.If I had known about it when I first started
out in the early 1970s I may well have elected to become an EA.This in itself is an example of how the IRS
has not properly promoted the designation.

There is a true
need, and not just a “want”, for a voluntary certification program to recognize
and identify the competence of currently unenrolled 1040 preparers.Such a program would benefit the tax
preparation industry, the taxpayer public, and the federal government.

And there is a true
need for the IRS to properly recognize and promote the Enrolled Agent
designation, whether in its current state or as part of a voluntary two-tiered
certification program.

And there is a true
need for both enrolled and unenrolled preparers, and the IRS, need to combat
the totally untrue “urban tax myth” that a CPA is automatically a 1040 expert.

And, one more,
albeit unrelated, before I go. There is
a true need for an independent lobbying organization to represent the interests
of all PTIN-holders (see “Who Speaks for the Tax Preparer?”).

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